Payday lenders must take 'responsible approach'

Martin Wheatley, chief executive of watchdog the Financial Conduct Authority,
says he hopes proposed changes to how payday lenders can operate will mean
there is "less irresponsible lending to people who can't afford it".

2:36PM BST 03 Oct 2013

A clampdown on payday lenders which will see an end to firms giving loans the green light in 10 minutes has been announced by the City regulator.

New curbs proposed by the Financial Conduct Authority (FCA) will also limit the number of attempts payday firms can make to claw money back out of a struggling borrower's bank account.

The lenders will be forced to place "risk warnings" on their promotions and advertising, urging consumers to "think" before taking on a payday loan. The watchdog has powers to ban adverts if it thinks they are misleading.

The proposed new rules, which will come into force next year, aim to combat soaring complaints about the £2 billion sector, which has doubled in size in the last few years and is used by an estimated two million customers.

Payday lenders will have to carry out stricter checks to make sure that borrowers can afford to take loans out and they will only be able to roll a loan over twice, to stop consumers sinking into a spiral of debt.